The Doha Development Agenda

1. The Doha Development Agenda An Update World Bank December 1, 2005

2. Key Messages • A successful Doha Round is very important from a development perspective • Hong Kong Ministerial December 13-18, 2005 originally expected to agree negotiating modalities for agriculture and non-agricultural market access (NAMA), plus progress in services, rules, trade facilitation and development dimension • WTO Members now recalibrating expectations for Hong Kong, but maintaining the initial ambition for the Round • Hong Kong “an intermediary stage on the way to full modalities”; aim to agree on “a range of numbers – the outer parameters – in the July 2004 frameworks, and corresponding texts in the rule-making part of the negotiations” • Draft Declaration issued November 26 • Sights must not be lowered if Doha is to be a true development round • There is a lot of work to do before end 2006

3. Important progress has already been made • Conditional agreement on elimination of export subsidies • Narrowing of Singapore Issues to trade facilitation only • TRIPS waiver on access to medicines • July 2004 Framework Agreement elements on agriculture • Development at the center of a trade round

4. Outstanding issues • Key issues remain to be resolved • Agriculture, in particular market access • Cotton • Developing countries, especially MICs, on NAMA • Services • Including benchmarks • Development dimension • Complementary agenda on aid for trade

5. Agricultural Market Access * Numbers indicative only

6. 79%* Overhang 93%* Actual 47%* Large cuts are needed to reduce actual trade distorting domestic support $US billion *percentages refer to degree of overhang

7. NAMA • Definition of the formula • Agreement on Swiss formula, but not on coefficients • Flexibility for developing countries • Some groups seek special treatment • Newly acceded, small and vulnerable • Differentiation among developing countries • EU proposes the same coefficient for developed and advanced developing countries (with some additional flexibilities) - but this is very controversial • Participation in sectoral negotiations? • E.g., jewels, sports equipment, pharmaceuticals • Treatment of unbound tariffs • How to calculate the base rate for reductions?

8. Services • 69 offers, plus 30 revised (EU25 counted as 1), but low quality and lack of momentum • Mandatory quantitative benchmarks for coverage of commitments in service sectors? • Opposed by many developing countries • Plurilateral negotiations • Mandatory participation benchmarks? • Overall objectives for modes • GATS rules • Broad agreement to continue negotiations and intensify efforts

9. Trade Facilitation • Solid progress to date • Large number of proposals, broad participation • Special and differential treatment (SDT), capacity building (CB) and technical assistance (TA) integral parts of any agreement • Link between TA and CB and implementation of commitments will be a critical part of the negotiations in 2006 • Expectations that negotiations in this area will move from Uruguay Round-style “best endeavor” approach to commitments of secure financing for implementation • Role of international organizations, including Bank • Where next? • Text based negotiations on Articles V, VIII and X of GATT 1994?

10. Development Issues • Proposals to strengthen SDT • Focus on 28 (of the 88 proposals) agreed in principle for Cancùn, PLUS 5 agreement-specific proposals from LDCs • Duty and quota free access for all LDC exports • Resistance from countries concerned with preference erosion • Benefits require flexible rules of origin • Concerns re preference erosion and net food importers • Losses may be less than expected: offsetting gains; time period for implementation; utilization of existing preferences; likely price rises for food • Serious problem for a few countries, who will require increased international assistance – aid for trade- to cope with transitional adjustment costs • Adjustment costs should not be a reason to deny the benefits of liberalization to the vast majority of developing countries • Extended transition periods for affected products raise risk reducing gains from the round

11. Aid for Trade • Important complement to – but not substitute for – an ambitious Doha Round • Integrated Framework (IF) • Increased funding, plus enhanced ability to leverage much larger bilateral and multilateral resources • Including to address infrastructure constraints • Geneva-based task force of donors and LDCs working on a new governance structure, for agreement in April 2006 • Contributions likely pending agreement on governance • Adjustment • Diagnostics and assistance • Regional/cross-country needs • Exploring need for additional mechanisms

12. Aid for Trade cont’d • LDC proposal • Enhanced IF; adjustment facility managed by the WTO; infrastructure fund; debt relief, swaps and buy-back • Increased focus in bilateral programs • Scope to make progress in Hong Kong • Proposals in Nov 26 draft Declaration

13. Rules • Some highlights • Debate on clarification of disciplines on anti-dumping and subsidies (including fisheries subsidies) expected to become more intense in 2006 • Progress on transparency procedures concerning RTAs, but limited progress on strengthening systemic disciplines

14. Conclusion • November 2005, WTO Members recalibrate expectations for Hong Kong, but maintain the initial ambition for the Round • The hardest decisions of the Doha Round will now need to be made in early 2006 • End of 2006 target for completion (US TPA expiry, June 2007) • There is too much at stake to lower sights on Doha • Bank will continue to contribute through • Advocacy for an ambitious, pro-development Round • Research on trade policy and reform • Aid for trade, including cooperation on enhanced IF • TA and CB at globaland country levels, including greater integration of trade into country programs